Thursday, 26 July 2007

iPlayer

It's not even a month since the last i launch, but tomorrow sees the launch of another service that could disrupt its industry to an even greater degree than Apple promises to do with mobile telecoms. This time though, thankfully, we won't have to pay the homeless to wait in line for us to get hold of it.

The problem is that the BBC is publicly funded. It gets its money from everyone in the UK with a TV set because we all need a license to own a TV. The BBC's license revenue comes in exchange for a responsibility to deliver a universal service, free of advertising to anyone who pays the license fee. Foreign readers may find this curiously eccentric in the 21st Century, but the BBC is a national institution and we are British so that's the kind of thing we do.

The company (if you can call it that) is now operating in a very different world, but for many reasons (most of them sentimental), the BBC is still funded this way. As a result, it competes with other TV channels (and web sites) on an unequal footing because their funding model does not expose them to market forces.

Because the BBC is publicly funded, it has been free of the commercial pressures that competitors face on a daily basis. Has this given it an unfair advantage...? How many R&D departments would be given 4 years and £3m to deliver a project? Surely, anyone else in the same position would have lost the faith of shareholders well before now and management would be history. The BBC's unique position has shielded the iPlayer and given it breathing space in which to develop the service.

On the other hand though, how many R&D departments would face an Ofcom Market Impact Assessment, a Public Value Assessment, a full review by the BBC Trust and scrutiny by parliament before it could launch? The kerfuffle about the lack of service on Macs and Vista - there is a petition with 11,000 signatures with Downing Street asking the PM to ban it - is frankly pathetic. Do people really expect the BBC to be able to launch the service working 100% and available to everyone on day 1 with no testing?!?

Anyone who has ever been involved in product management will know that this is a recipe for disaster. The BBC cannot eat the elephant in one bite, but because of its funding model it will be forced (they might say "easily persuaded") to deal with standards issues like no other entity. The elephant will be consumed.

The Mac and Vista options might be addressed by making the content available through other media players as long DRM issues can be resolved. I suggested in my LUI Part 6 piece, where we described a prototype of the future of IPTV, these players are likely to include the likes of Joost. Because of its universal service obligation, the BBC is not in a position to say no.

The BBC's obligation extends beyond the internet however. For those without a PC, the BBC is investigating Virgin Media's on demand platform. This still leaves a chunk of people with no access to the service because of technology constraints on the user's side (no PC, no cable, no broadband).

Even though Freeview does not offer the bandwidth, the BBC is sure to get embroiled in how to serve these users, where other competitors would simply write off the niche as too expensive to serve. This is the flip side to the breathing space they have had to develop the service.

Driver for IPTV AdoptionOfcom's MIA states that by 2011, the iPlayer is likely to account for 3% of TV viewing hours, which doesn't sound like a lot. This is in fact about 45 mins per household per week, assuming total viewing remains as today at around 25 hours per week.

But, as with Freeview, the BBC gives this new(ish) technology the credibility to go mass market very quickly. There will undoubtedly be a knock on effect on all other broadband television services because there may not be a more trusted organisation anywhere in the world than the BBC. If IPTV is good enough for the BBC, it's good enough for me...

Looking closer at the Ofcom projections: 3% of total viewing is 9% of the BBC's current viewing. It would be reasonable to suggest that competitors services might grow in line with the BBCs. This would mean every household in the UK watching on average 2 hours and 23 minutes a week of IPTV by 2011. Over 3 billion hours a year...BandwidthThe MIA also says "The costs of the broadband capacity required to support the services could in aggregate be between £399 million and £831 million over the next 5 years." Once the capacity is there "the additional capacity would also be available for use by a wide range of other services, including commercial on-demand services, [so] it would not necessarily be appropriate to attribute the associated costs to the BBC services in isolation."

Ofcom's model says that the average capacity increase from the iPlayer will be 3GB per user per month by 2011.

Assuming that other broadcasters follow the same adoption curve, you are looking at almost exactly 9.5GB extra per user per month to serve the 9% of viewing hours at standard definition. This will add around 46kbps per user to an ISPs peak traffic load (approximately doubling what they have today). This is low, because I am using data that shows that early iPlayer alpha trial users had web-surfing-like peak to mean traffic profiles.

TV usage profiles tend to be much more peaky than web surfing traffic. Where you might get a peak to mean ratio on web traffic around 1.6, on TV viewing profiles, this looks more like 2.8. Cutting a long story short, this would push the traffic impact of the iPlayer from 46kbps per user up to around 81kbps additional traffic (easily tripling today's usage, from just one application).

Reverse engineering Ofcom's 3GB per user per month figure from the 3% penetration rate shows that they assume a 2Mbps encoding profile in their models. This suggests that high definition is not being taken into account.

If the BBC were to deliver at 1080p instead (as ABC.com in the US have announced they will), you might want to multiply the total capacity requirement by 5. With all content (ITV, Sky etc) as HD, the 9.5GB might be 45GB extra for every house connected to the broadband network. This would push the incremental peak load per user up by between 220kbps and 385kbps depending on peak to mean profile.

MoneyWhere there is demand, there is money, right...?

Actually, no. This is the other major problem with the BBC, the license fee and the universal service requirements. The BBC's iPlayer will not generate money from adverts (the BBC does not do ads), from subscription (the license fee already covers the service) and any other creative sources of income (including abroad), are likely to be relatively trivial.

This is not an issue for the BBC because the content is paid for already (its a catch up service of stuff already produced for broadcast). The service creation costs have been kept under control at £3m and rather than having to pay a big hosting bill, Kontiki's P2P client is being used, theoretically relieving the BBC of the burden of distribution costs.

The big losers are the networks who have to carry all this extra traffic and have no way of monetising it. This is again a BBC-specific problem because with other commercial broadcasters, the ISP is in a position to do an ad-revenue share agreement based on the unique element that the ISP can provide - the postcode. (We are going to come back to this point and the revenue opportunity from commercial broadcasters other than the BBC in LUI Part 10 early next week.)

The use of P2P actually makes the problem much bigger for the ISP. Historically, the BBC's web traffic, although significant, has been manageable via direct peering relationships between the ISPs and the BBC. Replacing this with P2P looks (to me at least) like a two fingered salute to the businesses that have to transport the BBCs product.

SummaryEven using the lowest results in the analysis, the iPlayer promises to double the traffic on the UK internet between now and 2011. On top of that the iPlayer opens the door to other broadcasters, which could mean that instead of doubling the volume of traffic, the iPlayer launch could drive an increase by tenfold or more.

I'm going to be watching the iPlayer's use of bandwidth very closely over the coming months. As I have done with Joost, Babelgum and 4oD, I will be running traffic source analysis and looking at where the Kontiki client gets its traffic from. Channel 4 also uses Kontiki, but using their service, I found that the scarcity of peers meant that much of the traffic was client server from the seed caches instead of actually using P2P.

I will be keenly examining the peer hit rates as that will determine the BBCs costbase. I will also be looking at where these peers are and whether BBC/Kontiki keeps traffic within the service provider's network or whether (like other P2P I have tested), in-country traffic source management is random. I will be publishing the findings here at periodic intervals.

If I can get the client from the website, the first set of data will be published here by lunchtime tomorrow...

UPDATE: no client = no data = no update. Sorry folks... I got to the site by 7.40am, regsitered but have yet to receive the invite. I wouldn't say that the message board is on fire yet (10 ir so people grumbling about the same thing), but there are people who stayed up until midnight to register who are in the same boat.They let Mashable in though, so if you are looking for a sneak peak that's the place to go. If you want a different perspective on possible adoption rates, I also found this.IWR were able to run an initial test and reported that a 30 minute programme was 108MB, which suggests an encoding rate of 480kbps. It is not known what the download speed was, which may be different from the encoding rate to allow for buffering. The picture defaulted to 400 x 200 screen size, which sounds small.More on this when I get my prized invite...

The question about whether P2P clients are good enough to make the right decision though is still open to me. Managing this might take something like a CacheLogic solution.

I know from Joost traces that although they have made improvements keeping traffic sources in Europe (when they launched a significant chunk came from N America), there is still a lot of traffic coming not just from peers on other UK networks, but also from other european ISPs.

Kontiki's 4oD service did not have enough peers online for me to be able to judge how good that client is in soliving the problem without caches.

This is the most important data points I will be looking for in iPlayer traces too. How geographically / network aware are these new services?

great that the BBC is finally following the example of the Dutch Public Broadcaster who have been doing this for years now with Uitzending Gemist. (sorry, couldn't help the nationalistic bit)

What I do want to add to the discussion is that I disagree with you on the comment that the BBC is offloading costs on the ISP industry. It isn't. It's offloading costs on the consumer. There are basically three who can pay for the bandwidth bill, the supplier, the consumer and third parties (advertisers). Since suppliers and third parties are not an option in this case, its the consumer. There is not necessarily a problem with this, though your tone seems to suggest there is (offloading costs on ISP's). Like any invention that makes innovative use of the network it pushes ISP's to innovate in their networks, their interconnections and in their pricing shemes. If the iPlayer becomes a huge hit, the ISP will have to build a better, faster network, with more peerings, better transit deals and maybe innovate with prices. All in all its about offering consumers more and hopefully charging less for it, which is in the end what competition should lead too.

From another point of vie (very close) you can also look at a popular "Service" such as You-Tube that currently in north america reached to 10% of total internet traffic, and there are no revenue sharing with ISPs